The relationship between the board, CEO and staff

Truth is born in disputes. However, when it comes to managing a company, it is necessary to seek it or make decisions through compromises. It is an exclusively internal corporate issue if different management bodies have different visions. So, here are more about relationships between the board, CEO, and staff. 

The board and CEO

Since the main participants in the corporate governance system are owners and managers, the relationship between the board of directors and management is predetermined by the corporate control model existing in a given company and the degree and forms of participation of the owner in management. At the same time, stereotypes of behavior that have developed in national economic practice are of great importance.

The CEO is the top executive of the company. The executive director determines the enterprise’s key values, strategy, and goals and is responsible for decisions of paramount importance. In smaller companies, the CEO takes on a “hands-on role,” making lower-level business decisions such as hiring, financial planning, sales management, etc. He is involved in high-level strategy and tasks in large corporations and is not engaged in operations.

The duties of the CEO can be roughly divided into four categories: 

  • strategic tasks, 
  • financial control, 
  • company management, 
  • coordination with the board of directors and senior management.

Increasing the role of the board of directors, strengthening its composition through professional and active external directors, and intensifying work raises the question of the practical delimitation of powers between the board and the executive bodies. Its task is to control and be a consultant and confidant of the executive director.

In many cases, the board’s activity is reduced to more or less regular meetings, where opinions are expressed on predetermined issues, or the final decision is reserved by the main shareholder or CEO, depending on who controls the company. An excessively active and involved board of directors closes on itself an expanding range of management issues, which sooner or later leads to a limitation of the real powers of the CEO, partial substitution of the executive leadership, and the actual transformation of the board into super management. In this situation, the statutory powers of the company’s executive management become nominal because they cannot be exercised without the board of directors’ participation. 

CEO and staff

Human capital is one of the defining business assets today, which means that expanding the area of responsibility of HRs is logical. Moving an HR director to the CEO position in large companies is already a fact. This transition is not a whim of investors or a corporate experiment but a necessity. Today the HR director creates partnerships with employees and helps them develop professionally through personalized programs. The CEO develops and implements the philosophy by which the team will live, and HR takes on the role of its main daily guide.

There are several important points to help you make the relationships between the CEO, boards, and staff more transparent and efficient:

  • Clear messages about corporate goals should come from the leader. All employees must be kept up to date to avoid rumors and misunderstandings. They need regular reporting meetings on the state of affairs and goals of the company. 
  • It is important to show that each employee contributes to the company’s success. It will serve as an additional means of motivating staff. Much more important is the involvement of employees in the decision-making process and careful attention to their ideas and opinions.
  • The CEO must give subordinates the freedom to make decisions, trust them and not interfere in their work.